Origin Appliances Private Limited Vs Indospirit Bars Private Limited (NCLT Principal Bench, New Delhi)
Summary: The National Company Law Tribunal, Principal Bench, New Delhi, admitted Origin Appliances Private Limited’s petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, and initiated the Corporate Insolvency Resolution Process against Indospirit Bars Private Limited. In its order dated 30 September 2026 in CP(IB)/162(PB)/2026, the Tribunal rejected objections concerning limitation, proof of operational debt, pending discount adjustments, pre-existing disputes and alleged misuse of insolvency proceedings. It found that the supplies were corroborated by invoices, transport-permit particulars, tax records and the corporate debtor’s own certified books. The amount of the creditor’s claim was nevertheless left for verification by the Interim Resolution Professional/Resolution Professional.
Origin Appliances, which held retail liquor licences under the Delhi Excise Policy, 2021–22, supplied Indian Made Foreign Liquor to Indospirit Bars’ outlets between 10 August and 27 August 2022. The invoices aggregated to ₹1,66,05,244. After adjusting credit notes towards trade discounts or “trade payouts” of ₹57,54,295, the creditor claimed principal dues of ₹1,08,50,949. It additionally claimed ₹84,26,282 as interest at 24% per annum for 1 October 2022 to 25 December 2025, taking the total demand to ₹1,92,77,231. The corporate debtor disputed the debt, the interest entitlement and whether the outstanding amount exceeded the ₹1 crore statutory threshold.
On limitation for a Section 9 application, the corporate debtor relied on the entry of 1 October 2022 as the default date in Form 5 and the creditor’s calculation of interest from that date. It argued that the three-year period had expired before the demand notice and petition. The creditor maintained that the parties operated a running commercial account involving discounts and credit-note adjustments, and that the net liability became payable upon closing the accounts for FY 2022–23.
Referring to B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates, (2019) 11 SCC 633, and Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries Pvt. Ltd., (2020) 15 SCC 1, the Tribunal recognised that limitation runs from default in payment of a debt that has become due and payable. It acknowledged inconsistencies in the creditor’s pleadings and the absence of a separate agreement fixing the payment date. Nevertheless, it held that Form 5 must be read as a whole and that the default date must be determined from the complete factual record, rather than an isolated entry.
The corporate debtor’s own case contemplated reconciliation of discounts, payouts and promotional adjustments. Its ledger described purchases as “Subject to pending discussion on purchase discount”. The Tribunal therefore rejected reliance on the printed “Cash & carry” description as establishing immediate payment liability. On the facts, it treated the debt as becoming due and default occurring on 31 March 2023. Although the petition became defect-free on 3 April 2026, its initial filing was on 24 March 2026, within the limitation period identified by the Tribunal. The ruling thus turned on the recorded course of dealings and initial filing date; it did not establish a general rule that every unpaid invoice becomes due only at financial year-end.
On proof of debt, the Tribunal found that the creditor’s ledger was supported by independent material. This included tax invoices bearing Excise Transport Permit numbers, Form 27D recording tax collected at source, the corporate debtor’s corresponding purchase entries, its DVAT-30 records and the creditor’s auditor-certified statement. Applying the corroboration principle discussed in Jay Ambe Industries v. Garnet Specialty Paper Ltd., First Appeal No. 5228 of 2019, decided on 7 January 2022 by the Gujarat High Court, it held that the claim did not rest merely on a unilateral ledger. The corporate debtor had also failed to identify any particular omitted credit note, discount, payment or invoice against which goods had not been received.
The corporate debtor’s auditor-certified ledger reflected ₹1,55,23,596.71 as payable to the creditor as on 1 September 2026. The Tribunal considered this material inconsistent with a blanket denial of any subsisting debt. Importantly, it acknowledged that the auditors’ certificates contained disclaimers against treating the balances as confirmation, admission or acknowledgement of liability, and expressly limited its treatment of those certificates to the present proceedings. It found an operational debt in default exceeding the statutory threshold, while directing the IRP/RP to verify and value the creditor’s claim under the Code and applicable regulations.
Regarding pre-existing disputes under the IBC, the Tribunal applied Mobilox Innovations Private Limited v. Kirusa Software Private Limited, (2018) 1 SCC 353. It examined whether the defence disclosed a plausible contention requiring investigation, rather than a spurious or unsupported assertion. The demand notice was delivered by email on 30 December 2025, by speed post on 1 January 2026 and by hand on 5 January 2026. The corporate debtor first replied on 29 January 2026 and produced no earlier correspondence, suit, arbitration or other material demonstrating a dispute concerning the supplies, invoices or credit notes. Read against its certified records, the objections were held to constitute a spurious defence. The finding rested on the absence of a substantiated prior dispute, alongside the delayed reply.
The Tribunal also rejected the remaining objections. Repeated reminders were not a statutory prerequisite to a Section 9 application, and the creditor’s separate recovery notice did not itself create a pre-existing dispute or prevent insolvency proceedings. Investigations concerning the Delhi Excise Policy did not invalidate these transactions without a demonstrated nexus. Errors describing the affidavit’s deponent as a director of the respondent and addressing the vakalatnama to the NCLAT were treated as curable clerical defects, particularly because authority was supported by a board resolution and no prejudice was shown. No material established fraudulent or malicious initiation under Section 65.
Consequently, the Tribunal admitted the petition, declared the Section 14 moratorium and appointed Gaurav Gupta as IRP. It directed the creditor to deposit ₹3 lakh towards initial expenses, subject to Committee of Creditors approval and adjustment against IRP/RP fees and expenses. Public announcement, claim verification, transfer of management to the IRP/RP and cooperation by the corporate debtor’s personnel were also directed. Admission of CIRP did not amount to final approval of the entire ₹1,92,77,231 claim or the claimed 24% interest; claim verification remained with the IRP/RP.
Cases Discussed
- Jay Ambe Industries v. Garnet Specialty Paper Ltd., First Appeal No. 5228 of 2019, decided on 07.01.2022 (Gujarat High Court) — Referred to for the requirement that ledger entries be corroborated by independent evidence; the Tribunal found sufficient corroboration in the present case.
- Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries Pvt. Ltd., (2020) 15 SCC 1 (Supreme Court) — Cited by the corporate debtor and referred to by the Tribunal on limitation running from default.
- Transmission Corporation of Andhra Pradesh Ltd. v. Equipment Conductors and Cables Ltd., (2019) 12 SCC 697 (Supreme Court) — Relied upon by the corporate debtor in support of its pre-existing-dispute objection.
- B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates, (2019) 11 SCC 633 (Supreme Court) — Applied for Article 137 and accrual of the right to apply from the date of default.
- Mobilox Innovations Private Limited v. Kirusa Software Private Limited, (2018) 1 SCC 353 (Supreme Court) — Applied to distinguish a plausible, genuine pre-existing dispute from an unsupported or spurious defence.
